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Audit Trail and Auditors

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Please help with the following problem.

What is the meaning of audit trail, and why is it necessary for the audit process?

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Solution Summary

The solution explains what an audit trail is and how it is used in independent audits of companies. Two examples are given to demonstrate the problem with a lack of a good audit trail. Also included in a short article about computer audit trails. Information about using audit trails in cybercrime is mentioned.

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In terms of auditing work completed by CPA firms preparing financial statements for clients, the audit trails through the financial records of a company are essential to be able to perform substantive tests of client records. Following are two examples:

1. In the accounts receivable detail records, the auditor reads an entry which says 'credit balance due from customer'. A good audit trail would provide a reference back to a credit memo or an invoice to allow the auditor to examine source documents that would explain and substantiate the entry.

2. In reviewing the asset ...

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